Structural Transformation Through Electronic Based Companies

Structural transformation through electronic based companies

Strategic management, this are plans by FedEx Corporation which helps them in meeting their objectives. FedEx Corporation has to interconnect all aspects of their activities this includes;

Objective setting, this can be setting of the general goals such as increasing the rate of return on capital employed. Strategic direction, FedEx Corporation may decide to diversify into new markets, where the competitors, does not have much to offer to the public. Competitive strategy, this is where FedEx Corporation decides, on the basis of its own competitive strengths and weaknesses in comparison of their competitors. Functional responsibilities where FedEx Corporation should ensure that all functional areas should be efficient and co-ordinate, this can be done by using appropriate organization structures, which hence helps in reducing costs and improve customer services.

The competitive forces model, developed by Michael Porter of Harvard University in 1980, said he has identified five forces that influence the nature of competition in an industry.

The threat of new entrants: -This is where a new organisation comes in the market. Since there are many barriers to entry such as high capital requirement, access to the distribution channels, experience in the same field, overnight delivery and differentiation such as overnight delivery it's very hard for the entrant to enter in the same field.

The threat of substitutes: - the availability of substitute services such as the use of postal services, using of personal vehicles and emails are the most common substitutes. For customers not use the substitutes, FedEx comes up with differentiation which retains the customers.

Buyer Power: - Customers aim is to pay for the lowest price for services or products. Some of the buyer power is likely to be high when some of the following conditions favour them such as; when there are many different couriers companies and when the cost of switching to different courier companies is low or which requires little risk, such as DHL. FedEx is trying the best to retain the customers by giving differentiation strategies by improving their services by being fast, overnight delivery, the customer can calculate their own cost, and the customer knowing the current location of his cargo.

Supplier Power:- Supplier power is likely to be high bargaining power when; When the customers lack alternatives of switching the courier companies, like they have high bargaining power example between 1-20 kgs they all charge the same price. The brand name of FedEx makes it stronger, when they rebrand their subsidiary such as FedEx Logistics, FedEx ground and many more. Substitutability, such as posting of letters, importing by ourselves, there are some products we have to use the courier company making their power to go up.

Competitive Rivalry: -these are organizations which have the same services aimed at a certain group of customers. Rivalry is possible are high where competitive markets are competing such as launching of the websites, by using more sophisticated systems and by advancement in the IT.

Michael porter outlines some of the factors which make rivalry more intense this includes:-

When competitors which are in balance such as FedEx Corporation and DHL, when prices are similar, leading to price wars. When the services are similar, also makes the rivalry more intense.

Porter's value chain techniques are divided into primary and secondary activities. Primary activities are mostly concerned with the creation and delivery of the product or service. These are:-

Inbound logistics: - these are activities where FedEx Corporation deals with receiving, storing and distributing the parcels. This also includes things like transporting, handling of the material etc. receiving of the parcels, handling the products within the point, handling within the dispatch point, transportation,

Operations: - these include activities such as packing of goods, into proper package before sending the parcels. Labelling, sorting of the parcels, repackaging.

Outbound logistics: - these are collection, storing and distributing of the parcels to the customers, products are leaving the centre and when the products are reaching the destination. Loading to the airplanes, Lorries etc. transport, offloading, dispatch of the products to the customers and custom clearance,

Marketing and sales: - it's a way of letting the customer aware of the service; this can be done such as advertising, branded vehicles, customer service, the interactive website and sales promotion

Service: - includes all the activities which will help to maintain the value of the service, tracking of the goods, when they added the ware housing service. Customer calculating cost of their parcels.

Firm infrastructure: - the aircrafts, the Lorries, the offices which were being opened, the ware houses, buildings, which helps them in their activities.

IT: - this is basically all support activities and systems being used such as EDI.

HRM: - this is the recruitment of staff where FedEx Corporation recruited 200,000 people for operations and 5,000 people in IT.

Procurement: - went to purchasing the computers, offices to let, buying the airplanes, packaging the stuff like boxes, and stationery.

Margin: - this is when FedEx Corporation made profits of 1 Billion mark in the history of US.

Source of diagram (http://www.provenmodels.com)

In order for these groups of primary activities it is linked in supporting activities which hence helps in the improvement of the effectiveness as well as efficiency of primary activities, they are as follows: -

Procurement: - this is whereby FedEx Corporation tries to get various resources inputs for its primary activities.

Technology development: - technology will help to understand how the industry is going to undertake its processes such as improvement in services with the help of technology.

Human resource management: - it's normally done by the management, which deals with activities such as recruiting, training of the staff, managing, giving incentives to the staff.

Infrastructure: - these are structures of the organization and routines, which helps the organization to plan, quality control, finance etc.

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